Netflix Inc. is currently aiming for global domination with its vigorous expansion plan. The company went live in 130 countries simultaneously which made its services available in almost 190 countries across the globe. It is closing down to the 75 million streaming subscribers’ mark hence the streaming giant is all set to take on the challenges to become the first global TV network in the world. And it certainly does face a ‘titanic’ obstacle amid of its massive foreign push.
It is well known that the US user growth of Netflix has been stalled in recent times and it was quite worrying for the firm. This was one of the biggest reasons of as to why the streaming service provider considered expanding into international market. In order to boost its streaming subscriber growth, jumping into international markets was a wise decision and it can be seen from the new figures which the company recently revealed. According to sources, Netflix managed to add 5.9 million streaming subscribers globally, all thanks to its international push.
When Netflix announced regarding its moving everywhere plan, analysts pointed out that regardless the global TV network is capturing an important market, it is missing on one as well. Netflix is almost everywhere in the world except China.
Stuart Kirk, who is a reputable analyst team lead at Deutsche Bank, stated “If the smallest FANG, Netflix, really can operate in every country except China, then perhaps a valuation of 365 times the earnings it announced this week is not so ludicrous. But consider the implied subscriber growth. To fall in line with the market’s 15 times earnings multiple, Netflix requires an extra $2.9bn of income. At its ten-year average margin of six per cent that equates to $50bn of revenue.”
This is not the only challenge which the streaming giant is facing at the moment. The CEO of the company, Reed Hastings, stated at the CES 2016 in Las Vegas that Netflix will soon launch in the region and there is no doubt it will be a success in no time. Investors and shareholders are quite satisfied with the performance as the firm posted results which surpassed their expectations for the fourth quarter of its fiscal year. The international subscriber growth ‘blew past’ expectations as well as Netflix added 4.04 million streaming subscribers from its new location markets in the final three months of 2015.
The challenge which the streaming giant should take care of in the near future is that most people in the world do not find high speed broadband affordable. As a high speed broadband connection is recommended for streaming purposes when it comes to Netflix, it might create troubles.
According to the reports published by International Telecommunications Union, it is believed that people living outside the boundaries of United States and European countries mostly do not have an internet access at all. If developing countries are considered then only 35 percent of people have direct access to internet where as only 10 percent people living in the under developed countries have the privilege to afford an internet connection.
According to ITU, there are many countries in the region of Africa, Asia & Pacific, Middle East, and South Africa in which internet access is hard to afford. They make up over 10 percent of the average GDP per capita of that region. Hence in such countries, the cost of services that Netflix provides is higher than the GDP per capita levels which are relatively lower regardless. “The cost, or more precisely affordability, of Internet access has a significant impact on the uptake of services,” the group added.